Memeorandum

February 08, 2018

House Republicans To Build The Wall!

Lest you had a moment of hope that Washington dysfunction might be about to ebb, we are here to help you despair:

House Intel Republicans plan to wall off their aides from Democratic staffers

In a sign of increasing partisan hostilities, Republicans on the House Intelligence Committee plan to construct a wall – a physical partition – separating Republican and Democratic staff members in the committee's secure spaces, according to multiple committee sources. It's expected to happen this spring.

More interesting is Trump's brand-spanking-new EO that lets them confiscate the ill-gotten gains of corruption. On the one hand, this is civil asset forfeiture on steroids, but on the other hand it's fun to dream about Soros and the Clinton Foundation and Obama having all of their money taken away. Think of it as a down payment on the Obamadebt.

My fantasy is that Obama becomes so broke that he has to become a 'greeter' at a Las Vegas poker room..

Years ago on a trip to Vegas there was a famous black athlete doing just that.

A suggestion for our host: Now that the "last page" trick no longer works, perhaps put "4" in the link instead of "100"? And call it "Page 4". That way if the thread gets longer than three pages, at least we can jump to p. 4.

I've done this with the applet on my iPhone. Maybe I'll create a bunch of them ("Jump to p. 5," "Jump to p. 6", etc.). For those who are interested, the code for the applet is on the JOM Wiki, still with "100" in the page entry. Just change the 100 to 4 or whatever.

I've been working on this for a little while. I think it's something that many of you may be aware of, but, perhaps, not in the full context. It's important to understand just how bad the 2007-2008 financial crisis was.

If you've ever heard of the term "repo", you may associate it with cars being picked up in the middle of the night and returned to the custody of the banks who made the loan.

But it also occurs in another connotation, a "repo" also refers to a financial product/transaction known as a "repurchase agreement", or "repo", for short. A "repo" is an agreement between a bank/securities firm and a customer. The customer proffers a bond/collateral to a securities firm which then loans money to the customer. The "repurchase" part of the agreement is that the customer agrees to buy back the collateral the next day at a price agreed to in the "repurchase agreement." That price will include an imputed interest rate. If agreed by both parties, it can be rolled over to the next day.

This not a new financial product. It's been around for more than a hundred years. Kind of a backwater. The market did grow much larger when things like home loans, car loans, credit cards, and other things were securitized into bonds back in the 80's. More bonds = more collateral = more "repos".

"Gorton: In the last 30 or 40 years, there have been a number of fundamental changes in our economy. One of the most fundamental of these has been the rise of institutional investing. The amount of money under management of institutional investors has just been exponentially increasing. These include pension funds, mutual funds, large money managers. And these institutions basically have a need for a checking account, if you will. So if you’re a large institutional money manager, you may need a place to put $200 million, and you want it to earn interest and to be safe and accessible. That led to the metamorphosis of a very old security: the sale and repurchase (or “repo”) market. Like a check, repo had been around for perhaps 100 years, but it was never very large."

So we have lots of institutions that are willing to loan overnight. But they want great collateral - in olden days that meant US government bonds which limited the size of this grey market. Now add in the new-fangled securitized debt bonds rated AAA or BBB and we have more available collateral. More money, more collateral and the market expands.

"Gorton: Right. Let’s just review how repo operates. For repo to work, firms that want to borrow cash (to finance their activities) must hold a sufficient amount of bonds on their balance sheets to be used as collateral when depositors (effectively lenders: money market mutual funds, other institutional investors or corporations seeking a place to save large quantities of cash in the short term) arrive to put their money in the “bank”—the firm wanting to borrow cash. In the example I used earlier, the “bank” was Lehman Brothers, but most financial firms using repo didn’t collapse as dramatically as Lehman did."

Jimmy, I tried writing a function to cycle through page 1, 2, 3, etc., testing for the existence of the page until an invalid page message occurs, after which I'd have created a last-page link in the narcisolator. Couldn't figure it out. Maybe someone else knows how to do this or can figure it out.

"Exclusive: Trump administration may target immigrants who use food aid, other benefits

Receiving such benefits could weigh against an applicant, even if they were for an immigrant’s U.S. citizen children, according to the document.

“The administration is committed to enforcing existing immigration law, which is clearly intended to protect the American taxpayer,” said Tyler Houlton, a DHS spokesman. “Any potential changes to the rule would be in keeping with the letter and spirit of the law – as well as the reasonable expectations of the American people for the government to be good stewards of taxpayer funds.” "

So those bonds, if they’re securitization bonds, asset-backed securities, they are linked to what were portfolios of bank loans. Because of this link, traditional banking and shadow banking are integrated. They’re part of the same system. Traditional banking funds itself in large part by selling loans to firms that use those loans for collateral for this other category of loans.

Stepping back in time, before we had federal money, banks printed up their own dollars. Bring them to a merchant who knows the bank and he/she will accept them at face value. Bring in dollars from an out of state bank and the merchant is going to go off and consult some valuation book to see what they're worth, maybe he only offers a "haircut" of 95 cents on the dollar.

So you've got an inefficient system of money that is information sensitive. If you know more than the other guy what that dollar is really worth you gain from the transaction. The old phrase "bad money drive out good money" holds. You spend bad money, hang onto the good money and eventually only bad money is in circulation. Federal money changed that.

ext, I don't know how to do any of this coding, so I can't help. But I figure having a "jump to p. 4" is better than nothing, especially on the iPhone when it's hard to manually change the page. And it's easy to create a bunch of them for different pages on the iPhone (and iPad of course).

And in fact it works for your old narcisolator code too. Now if I click on a thread in the "recent posts" section, if it's 4 or more pages it will jump to p. 4. But the real help is with the iPhone/iPad.

US government bonds had a known value. Corporate bonds had known values and were rated by rating agencies that pored over the company's books. New classes of securitized bonds had known values and were rated by the same agencies.

Until, all of a sudden, they didn't. And we're back to asymetrical information. I might know more about a particular bond than you do. We can no longer accept the fiction that these bonds are all AAA.

"Gorton: Yes, the house price decline had the biggest impact on subprime mortgages, and that’s the information that was revealed by trading the ABX index, although I think it was widely known and understood, probably, beforehand. But the question is, again: How could that shock lead to such a big crisis?

Remember: At the time, subprime mortgages outstanding totaled about $1.5 trillion. If all of that had defaulted with zero recovery, that would not have been a global financial crisis. That would have been a problem, because poor and minority people received a disproportionate share of these subprime mortgages. And surely there were problems with all sorts of other things—underwriting standards, broker incentives—but they didn’t constitute or cause a global financial crisis. So what happened?

What happened, I think, is that the depositors in the repo market got nervous to the extent that the only way to protect themselves against agents producing private information was to ask for a buffer. Let’s go back to the repo market. In the repo market, I give you $100 million; you give me $100 million worth of bonds. Let’s say those bonds are AAA, credit-card-linked bonds, an asset-backed security. The only way I can lose as a depositor is if you fail. I am then allowed to unilaterally terminate the agreement, and I go to sell my bonds and I fetch less than $100 million.

Now, if the shock causes me to worry that when I sell my bonds somebody will have produced private information (because now, unlike before, it’s profitable to do that), then I can protect myself by saying, “I’m not going to give you $100 million. I’m only going to give you $80 million, and you give me $100 million of bonds as collateral.”

So that gives me a 20 percent buffer against that possible loss. For you, however, that’s a big problem because you were financing $100 million with me before and now you’re only financing $80 million, and so now you have to finance the other $20 million somewhere else.

Gorton: Right. This was the increase in haircuts. An increase in haircuts is a withdrawal from this banking system. There are several studies that allow us to put some numbers on this. With Andrew Metrick, I’ve estimated the size of the repo market; two economists at the BIS [Bank for International Settlements] have estimated the size of the repo market independently and in a separate way; and there’s an IMF [International Monetary Fund] economist who has also estimated the size of the repo market, again, with a third method. And we have another important piece of information, a very good survey of the European repo market, which is widely viewed as being much smaller than the U.S. market. So, if you look at all of this information, the size of the repo market, conservatively, was $10 trillion.

Gorton: The total assets in the regulated banking sector in the U.S. are $10 trillion.

Above by me and from excerpts from the Gary Gorton interview referenced below. The next part from me and the Richmond Fed excerpts.

Shadow banking activities, on the other hand, faced no explicit government support and no safety and soundness regulation before the crisis. Runs on the system occurred in 2008 when “depositors” withdrew their funding from “banks.”
Because of the havoc that followed, the term “shadow banking” now has a generally negative connotation. Yet it remains a vital component of the financial system. The shadow banking system may have exceeded $20 trillion in liabilities at its peak, possibly doubling that of the traditional, regulated banking system. Today it stands somewhere around $15 trillion. Shadow banking is critical because it funds the traditional banking sector by purchasing loans from bank balance sheets. This allows banks to shed risk and extend additional credit. Without shadow banking, traditional banking likely would be much costlier for households and businesses."

"Banks found a way to finance themselves that was much more profitable than deposit taking and its associated costly regulatory requirements. They securitized the loans they made and sold them to eager investors, which shifted assets and associated risks off their balance sheets. Securitization was such a successful innovation that even nonbanks, like large corporations that issue credit cards or auto loans, used it."

So we've got more money willing to be invested in the "repo" market, more collateral and the market expands until it's as large, or larger than the combined assets of all US banks. In some ways it's like a checking account for institutions and corporations. And some companies used the short-term "repo" money to finance long-term bonds. The money was cheap, less than the cost of regular borrowing.

"Many borrowers were highly leveraged. Investment bank Lehman Brothers, for example, maintained $700 billion of assets and corresponding liabilities on capital of about $25 billion. A large portion of those assets were long-term investments that could not easily be sold if cash were needed, yet Lehman, like others, chose to fund them largely through short-term repo markets since copious demand for
short-term investments made that funding source cheap. In 2008 Lehman would sometimes roll over $200 billion of its balance sheet each day in repos."

New legislation would effectively block President Trump from staging a military parade after the idea of tanks rolling down Pennsylvania Ave. drew comparisons to North Korea and the Soviet Union.

The "Preparedness Before Parades Act," introduced Thursday by Rep. Brad Schneider, D-Ill., would create rules that make such parades nearly impossible.

“I have severe concerns about the cost, diversion of resources, and effect on readiness of a large-scale parade seemingly conceived only to please the whims of the president,” Schneider said in a statement."

"How was the breakdown of repo markets like a bank run?
Repo lenders face a daily decision to roll over the investment — that is, to not “withdraw” their funds from the shadow banking system. The more repo lenders withdraw, the more likely the borrower is to become insolvent and default, leaving lenders with the collateral. Yet if repo lenders begin to not want or trust the collateral, their version of deposit insurance, they’ll be more likely to withdraw their investment. If this self re-enforcing cycle escalates, lenders have no choice but to withdraw or risk being the last one standing and holding potentially devalued collateral.
Here’s how this played out during the fall of 2008: On rumors of severe housing exposure and potential failure, Lehman Brothers’ counterparties refused to roll over the investments that funded its operations. This created a panic. Investors were uncertain which large institutions — many of which they or their counterparties had extended loans to — could face a funding crisis next. Yet mounting subprime defaults also made investors doubt the value of the collateral that was supposed to make them whole. Repo lenders began requiring larger and larger haircuts as insurance. Repo borrowers were forced to sell other assets in order to provide the haircuts. As the panic wore on, more and more assets were sold and their prices dropped, requiring the borrowers to sell still more, dropping their prices further. Collateral became worth less and less until repo lenders stopped lending entirely. That took away a major ultimate funding source for virtually all types of economic activity, all within a matter of days."

Those decisions were taken out of the hands of the "repo" desk by the Risk Management Committees at all of the financial institutions. Nobody wanted to have "bad" collateral dumped on them and then not have it be repurchased. There just wasn't enough time available to set up the now required research to evaluate whole classes of securitized debt. If somebody knew the real value of a bond - and you didn't - it could take down the whole firm. Asymetrical information.

Thanks for your tips on my Indian relatives investigation. I posted this yesterday for Kev, but not sure he saw it:

Sorry I fell asleep last night after posting my Indian question.
I realized this morning when I reread that I got a couple things wrong.
It was my paternal grandma, and the relative came to Jamestown in 1627.

Several years back, when Mrs. Buckeye started a deep dive into ancestry.com, a cousin who took care of my granny ("Ginky") told me that as she neared death she told her all kinds of family history.

Said she was part Cherokee, which I never knew, never heard my dad talk about it, nor anyone else for that matter. Lisa said that Ginky told her she had a great granny named "Granny Hopper".

I mentioned that here a few years back and almost instantly daddy sent me the following link:

He seemed to have it at his fingertips, probably doesn't want to admit we're cousins. Can't say I blame him:)

Armed with that, and ancestry.com, Mrs. Buckeye found confirmation of the connection.

So the ancestry part I think I understand.

What I am really curious about is the history of the European settlers in the Virginia area and the relationships with Indians. In my family tree there were lots of intermarriages, almost every generation.

Also seems to be some evidence of offspring visiting England and being shown off to the King, etc. Bit like the real Pocahontas.

Was it just because the Indian gals were hot:), or was it more to improve the working relationships?

I would look through the Library of Congress catalog.
Maybe the New York Public Libary catalog.
The Mormom site I gave you.
Google books to see if any old histories have been digitized after copyright expiration.
Maybe the UVA catalog.
Maybe some other sites that have digitized old books.
I know that there are some colleges that have digitized some of their collections.

Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa, is preparing to release the transcripts from interviews his committee conducted with witnesses as part of the investigation into the now-infamous June 2016 meeting at Trump Tower between the Trump campaign and Russian officials.

In a letter to ranking member Dianne Feinstein, D-Calif., sent Thursday, Grassley, R-Iowa, said it is his “priority” to finalize and release the transcripts for the interviews conducted by the panel with Anatoli Samochornov, Donald Trump Jr., Irakly Kaveladze, Rob Goldstone, and Rinat Akhmetshin.

Frederick and I drive them back. Stop every 2 hours to walk them, give them water. Food mid-day and then wait 2 hours and walk them. They know all the rest stops on I-95. Bandit the first one just can't relax. Have to give him half a Benydrl before we drive off. The other two just lay down and sleep.

We always schedule a kennel with a Vet hospital on our way down or up. That way if anything goes wrong the Docs are there to take care of itl.

Mrs. JiB is in the final months of he renovation. Its been a total job. Inculding making he first floor totally un recognizable. When I go down, I hang out by the pool or the golf course. Just have a hard time recognizing everything until its all oone.

Ext:
I know exactly what you mean.
I am so glad you question what is posted and try to track down the source or the proof.
I have a pet peeve about doing things over again.
I call it peat and repeat.
If reposting add some NEW insight so I can gain new knowledge.
Just a request.

Democrat Senator, Mark Warner, who’s the head of the Russian probe, tried to set up a meeting with Christopher Steele and had a back and forth text messages to a lobbyist of a Russian oligarch. . This is all proven with text messages. He was trying to meet Steele in London

To cover his fanny/make sure there is no treatable etilogy, he ordered an EEG (rule out seizure)--neurologists always do that. Carotid ultrasound (she smokes, increased risk of plaques), rule out emboli from there as source.
Cardiac echo (again, rule out atrial thrombus or patent foramen ovale as source of thrombus).

As long as we open our eyes to God’s grace - and open our hearts to God’s love - then America will forever be the land of the free, the home of the brave, and a light unto all nations. #NationalPrayerBreakfast

Ext:
Yes Iggy is funny and smart.
I am sure my suggestion will be disregarded as it was before but repeats make me think of the expression blog hoggers.
Other people may want a chance to chime in but must first muddle through repeat posts.

Sen. Mark Warner, the top Democrat on the Senate Intelligence Committee who has been leading a congressional investigation into President Trump's alleged ties to Russia, had extensive contact last year with a lobbyist for a Russian oligarch who was offering Warner access to former British spy and dossier author Christopher Steele, according to text messages obtained exclusively by Fox News.

"We have so much to discuss u need to be careful but we can help our country," Warner texted the lobbyist, Adam Waldman, on March 22, 2017.

Throughout the text exchanges, Warner seemed particularly intent on connecting directly with Steele without anyone else on the Senate Intelligence Committee being in the loop -- at least initially. In one text to the lobbyist, Warner wrote that he would "rather not have a paper trail" of his messages.
...

In one text, Warner suggested he did not want Burr or any other senator included in the discussions: "Ok but I wud (sic) like to do prelim call u me and him no one else before letter just so we have to trail to start want to discuss scope first before letter no leaks.""

I see that Trenni the Trump-deranged moonbat from Boston sports radio is part of the curling announcing team, talking about how "frushtrating" it must be to lose. I don't know if that's an affectation that she picked up during the 8 years the previous FLOTUS wasn't ashamed of her country.

This is gobsmackingly stupid, unlike tony stark he didn't do his homework this like trying to contact Michael corleone through captain Hayden who was in the pay of the sullozos, of course Mccain actually arranged a visa for deripasha through manafort, just like he was much closer to serge Milan, who may have been steels dogbody.

It's inevitable that there will be repeated links--no one can sit here all night and day and we all are certain to miss some posts, esp when the threads get long or there are a number of them in a short time.

Deripasha is the aluminum tycoon who worked through manafort, he was in some of Simpsons early pieces, he was probably a competitor to akhmetshin the Russian American atty who also worked with Mccain in Kazakhstan, now why is that country important, uranium one rings a bell. The idea of reliable public business records in Russia is unreliable

Hugh Hewitt✔@hughhewitt
From one of my long time (but now retired) AUSA pals: “David Laufman resignation is a big deal.

As Dep. Assist. AG for National Security Division, he was the Primary Supervisor over Counter-Intelligence work in Nat Sec. He would have had a hand in the approval of
the FISA application on Page.

He likely had a role in the decision making on the Clinton email investigation since his section handled cases involving leaks of classified information. The decisions on granting immunity, and allowing conditions to be attached to the examination of computers, would have come from his office. I do not think those were conditions that the FBI would have wanted. On the immunity issue, FBI wouldn't have the authority -- that could only come from the prosecutors in Nat Sec.

The press reporting is that he offered his resignation yesterday, effective IMMEDIATELY.

That's what happens when you are told that your are the subject of an OPR or OIG investigation.

He was in the post since 2014 -- under Carlin, Yates, and Lynch in the chain of command.” This source isn’t perfect. None are. But very very accurate over many years.

Re black panther, it appears to try to capture some of the mystery of civil war, of course the nation that there would be some Xanadu type utopia that has a critical resource, like vibranium but has so little contact with the outside world is dubious. We can look at the Congo and koltan. Which isn't as glamorous but is key to global telecommunications.